Inspectors drop Prime citations but forward findings for fraud probe

The California Department of Public Health has dismissed findings against Prime Healthcare Services over its documentation of bloodstream infections, saying the department lacked evidence to cite hospitals over incomplete or inaccurate medical records.

But in a six-page analysis of the decision to rescind the findings, the department said it had not ruled out possible fraud as an explanation for high rates of septicemia.

Kathleen Billingsley, deputy director of the Department of Public Health, said findings of the February septicemia inspections and just-completed malnutrition reports have been forwarded to Medi-Cal auditors and the federal Health and Human Services Department's Office of Inspector General.

“It’s their responsibility to look at billing issues,” Billingsley said in an interview. “That is specifically what they do.”

Prime Healthcare, a 14-hospital chain based in Ontario, Calif., declared the decision a victory.

"We are pleased that CDPH considered all of the evidence presented by the hospitals and independent physicians in finding that there were no deficiencies related to the diagnosis and coding of septicemia," Suzanne Richards, Prime's chief clinical officer, said in a statement.

Prime, one of the state's largest for-profit hospital operators, owns hospitals in Orange, Los Angeles, Shasta, San Bernardino and San Diego counties. Inspections of its hospitals released last week show that some obese patients were diagnosed with severe malnutrition and given scant treatment for the condition.

The state health regulatory review of Prime’s septicemia diagnosis practices followed a computer analysis by the Service Employees International Union. The septicemia rate at Prime hospitals was triple the national average, the union found. Six Prime hospitals were in the 99th percentile for septicemia, and five more were in the 95th percentile.

The systemic and at times deadly bloodstream infection can be difficult to treat and entitles hospitals to a payment bonus from Medicare. Hospitals also can earn enhanced reimbursement for treating severe malnutrition.

The Health and Human Services Inspector General, which probes Medicare fraud, and the California attorney general's office are currently investigating chain billing practices.

State public health regulators inspected and cited several Prime hospitals earlier this year for medical record-keeping shortcomings related to septicemia. Inspectors found that 17 of 29 patient cases reviewed at San Dimas Community Hospital were reported as having the severe infection even though they didn’t have at least two symptoms of the condition or bacteria in the bloodstream.

At Chino Valley Medical Center in San Bernardino County, inspectors described three questionable cases, including a 71-year-old patient who was given the primary diagnosis of “unspecified septicemia,” even though she had “no sign of infection” and was not given an antibiotic.

Prime maintained that its staff used a broader definition to diagnose septicemia than regulators used in their review. Prime also appealed the findings.

Dr. Howard Backer, a former emergency room physician and director of the state Emergency Medical Services Authority, wrote an independent review outlining the decision to drop the citations.

Backer concluded that the public health department lacked evidence to cite the San Dimas, Chino and one Orange County hospital for failing to keep complete and accurate medical records. He noted that the medical coding sheet, where septicemia is listed for billing, is not typically part of the medical record.

He concluded that “coding practices are a potential cause of the elevated rates of sepsis at Prime Healthcare operated hospitals, but should be evaluated by other agencies concerned with billing practices.”

Prime is being sued by the Kaiser Permanente Health Plan, which contends the hospital chain has “upcoded” septicemia cases, or exaggerated the seriousness of patient illnesses for profit. Prime has denied the claim, and the case is pending in Los Angeles County Superior Court.

At the same time, health department investigators found that at three Prime hospitals, some patients were diagnosed with severe malnutrition but then received no medical intervention or treatment.

In a letter to state Sen. Ed Hernandez, D-West Covina, the health department said it launched the probe after California Watch reported that Prime hospitals had billed Medicare for treating alarmingly high rates of malnutrition, including kwashiorkor, a condition often associated with hungry children in the Third World.

Medicare pays bonuses of as much as $2,700 per case when a patient with another medical issue is also diagnosed with severe malnutrition, federal records show.

Investigators found problems at three Prime facilities – Sherman Oaks Hospital, Desert Valley Hospital in Victorville and Shasta Regional Medical Center in Redding. In 32 cases in all, patients who were admitted for treatment of other conditions also were diagnosed with malnutrition. But investigators concluded that the hospitals often didn’t adequately document the diagnosis, and patients didn’t actually receive nutritional care.

Eight of the patients diagnosed with severe malnutrition were overweight, according to the reports, including a 354-pound patient admitted to the Redding hospital for dizziness. No nutritional issues were noted in the patient’s records, investigators found, and “there was no documentation that there were any nutrition assessments and/or interventions.”

At Sherman Oaks, a patient with a leg wound also was diagnosed with serious malnutrition, even though the doctor wrote that the patient’s “current diet was adequate for now.” In two other cases at Sherman Oaks, patients were diagnosed with malnutrition, then put on a “regular diet” by doctors.

In five cases, hospitals diagnosed patients with malnutrition but never noted their body weights on medical records.

In interviews with investigators, hospital personnel indicated that the malnutrition diagnosis was being made when blood tests showed patients had low levels of the protein albumin.